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(VSE-TOL) - TRIOIL RESOURCES LTD

Date	Time	Headline
August 24, 2011	22:16	TriOil Announces Strong Cardium Well Result at Lochend and Reports Second Quarter 2011 Financial Results
TriOil Announces Strong Cardium Well Result at Lochend and Reports Second Quarter 2011 Financial ResultsCanada NewsWireCALGARY, Aug. 24, 2011 CALGARY, Aug. 24, 2011 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company" - TSXV: TOL) is pleased to announce that it has filed its interim financial statements and related Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2011.� Selected financial and operational information is outlined below and should be read in conjunction with TriOil's interim financial statements and related MD&A, which are available for review at www.trioilresources.com and www.sedar.com. Q2 2011 Financial Highlights: Reported cash flow from operations of $2.2 million in the second quarter of 2011 compared to cash flow from operations of $1.5 million in the first quarter of 2011. Closed a non-core asset disposition at the end of June of approximately 60 boe/d for net proceeds of $2.6 million cash and 2.0 net sections of Cardium rights at Lochend. Production averaged 1,212 boe/d compared to 1,286 boe/d in the first quarter of 2011, despite the Q1 disposition of Paddle River, which contributed approximately 100 boe/d to our Q1 volumes and approximately 60 boe/d being shut in since March at Tableland. Operating costs averaged $19.09/boe in Q2 versus $18.34/boe in Q1, inclusive of a plant turnaround at Lochend that amounted to $1.64/boe. Maintained a strong balance sheet, exiting the second quarter of 2011 with a working capital surplus of $2.75 million and undrawn credit facilities of $32.5 million. Lochend Cardium Operational Highlights The fourth Cardium horizontal well in our 2011 program (TOL 30%; TOL operated) was successfully completed with a 20 stage slick water completion in July. The well has averaged 323 boe/d (277 bbls/d of oil) in its first month of production and is performing well above our internal expectations for the Lochend Cardium project. The fifth Cardium well in our 2011 program (TOL 100%; TOL operated) reached total depth in late July, was successfully completed with a 20 stage slick water fracture stimulation in the third week of August, and is currently being equipped for production. The sixth Cardium horizontal well in our 2011 program (TOL 50%; TOL operated) has finished drilling and will be completed over the next few weeks. TOL successfully executed its first liquid propane gas ("LPG") fracture stimulation in one of our existing cased vertical wells at Lochend. The well has been equipped and commenced production in the third week of August. Extension of the gas gathering system at Lochend has been completed.� TriOil's wells and third party wells will be tied in to TOL's 99% owned and operated gas plant. An industry 3D seismic program, in which TriOil is participating, commenced in July. Lochend Cardium Overview Activity in the Lochend Cardium light oil play has increased dramatically over the past year. Prior to the summer of 2010, only 4 horizontal Cardium wells had been drilled by industry at Lochend, with 2 of them completed and on production. A year later, 33 horizontal Cardium wells have been drilled at Lochend, 24 of which have publicly available production information, and another 10 horizontal wells are currently licensed. With TriOil and the majority of operators at Lochend utilizing slick water completions in their 2011 programs, we believe the Lochend Cardium light oil play will deliver improved production results along with lower capital costs in 2011 and beyond. TriOil has accumulated a large, contiguous position of 82 (57 net) sections of land on the developing Cardium light oil resource play at Lochend in Alberta. Management believes that the Cardium at Lochend offers a sizeable, repeatable and economic light oil project with significant long life reserves. With the drilling success to date at Lochend, TriOil has confirmed a current drilling inventory of 68 (34 net) low risk development locations focused on the east and central portions of our Cardium land block. We expect that our inventory of low risk drilling locations will continue to expand as our ongoing drilling program de-risks additional TriOil acreage along the Lochend trend. Based on current oil prices assumptions and early type curves, Lochend horizontal oil wells deliver solid rates of return. TriOil is continuously evaluating drilling and completion techniques in an effort to continue to lower costs and improve production rates. After experiencing several issues and higher costs associated with oil based fracs. In 2011, TriOil switched to slick water fracs in an effort to lower costs and increase production rates and recoverable reserves, thus improving the economics of the play. TriOil is also evaluating LPG fracs in an effort to further increase rates and recoveries from the Cardium at Lochend. TriOil has now operated 5 (3.58 net) horizontal wells at Lochend and participated in another 7 (3.03 net) horizontal wells. We have drilled or participated in 6 (3.46 net) wells so far in our 2011 drill program, all completed, or planned to be completed, utilizing slick water. We are very pleased to release the results of the fourth well in our 2011 Cardium program. The well flowed at strong rates over its initial 14 days and continued to produce steadily once it was equipped. The well averaged 323 boe/d (86% light oil) over its initial 28 days of production. With the release of our most recent completion results, our four slick water completions to date have an average IP30 rate of over 200 boe/d, which is above our budgeted volumes. In addition to our ongoing Cardium horizontal program, TriOil has moved ahead on its first vertical LPG fracture stimulation. We successfully placed approximately 90 tons of sand into the Cardium formation in a single stage completion. The well has just been placed on production and we look forward to reporting production rates in the near future. TriOil owns over 30 cased vertical wellbores that penetrate the Cardium A and, assuming our LPG fracture stimulation results meet expectations, we have the potential to deliver cost effective production and reserve growth from existing cased vertical wells and at the same time de-risk future horizontal Cardium locations. The main extension to the gas gathering system has now been completed (TOL 20%) and TriOil and industry partners will be connecting the solution gas to our gathering system from the existing wells over the next few months. This gas will be processed at TriOil's 99% owned and operated facility, providing TriOil with additional third party processing revenue. TriOil is also evaluating an expansion of the Lochend Gas Plant and the construction of a joint central oil battery, to handle the expanding volumes being discovered in the Lochend area by TriOil and other area operators. These infrastructure projects will result in a reduction in the operating costs for TriOil and other industry operators at Lochend. Operating costs in Q2 were slightly higher than in Q1, mainly due to a biannual plant turnaround. Excluding plant turnaround expenses, operating costs for the quarter amounted to $17.45/boe. With the planned infrastructure additions, we are targeting $14.00/boe operated costs for the Lochend area. TriOil has a rig contracted for its 2011 and 2012 Lochend Cardium horizontal program and we have already acquired multiple surface leases for upcoming wells with 3 of the locations currently licensed. We plan to operate the drilling of 7 (4.71 net) additional Cardium horizontal wells over the balance of 2011 utilizing our current rig, and are budgeting 1 (0.2 net) non-operated wells at Lochend in Q3 2011, which has already been licensed. Outlook - Reduced Capital Spending and Lower Guidance The second quarter of 2011 was a challenging one for most of the oil and gas industry across Western Canada. A prolonged and very wet spring, coupled with significant winter snowfall, made access to many areas difficult or impossible. TriOil was no exception in terms of delayed programs and shut in production. Production from our Tableland property in SE Saskatchewan has been shut in since mid-April and has yet to resume, accounting for 60 boe/d of mainly oil production. At Sweeney, a wet spring and summer has resulted in approximately 20 boe/d of oil production being shut in since mid May. At Lochend, road bans were issued early (mid March) and a rainy June caused road bans to be left in place for an extra 3 weeks until the end of June. This caused a delay in the commencement of the second half of our drilling program, the completion of our previously drilled fourth Cardium horizontal well and the expansion of our gas gathering system. In light of lower than expected capital spending in the first half of 2011, and with the delay in recommencing the Company's drilling program, TriOil's capital spending for the year will be reduced. We currently anticipate spending approximately $25-30 million in the second half of the year, bringing the total spending for 2011 to approximately $45- 50 million. After giving effect to property dispositions in Q1 and Q2 and reduced capital spending due to weather related delays, our target exit production is anticipated to be 1,900-2,100 boe/d (65% light oil and ngls). Our year end net debt target is estimated at $22-24 million on current bank facilities of $33 million. The reduction in capital spending is not anticipated to negatively impact our progress & development at Lochend in 2011. TriOil ended Q2 2011 with a healthy balance sheet, positive working capital of $2.7 million and an undrawn credit facility of $32.5 million, and we plan to maintain this financial strength and flexibility through the balance of the year. Our current production is approximately 1,200 boe/d, net of Q2 property dispositions of 60 boe/d and shut in production of approximately 80 boe/d. The drilling program for the second half of 2011 will include 7 (4.71 net) operated Cardium horizontal wells and 1 (0.2 net) non-operated Cardium horizontal well at Lochend. TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium oil trends in Alberta. TriOil has successfully executed its business plan and has positioned the Company for solid growth in production, reserves and shareholder value. TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of August 25, 2011, there were approximately 31.5 million shares issued and outstanding (35.5 million fully diluted). Financial and Operating Results (1) � � � � � � � � � Three months ended June 30, � � Six months ended June 30, � 2011 2010 % Change 2011 2010 % Change ($, except share numbers)��Financial� � � � � � Total revenue 6,527,318 5,456,250 20 12,366,576 7,427,735 66 Funds from operations (2)2,206,119 1,606,378 37 3,745,526 849,952 341 � Per share - diluted 0.07 0.08 - 0.12 0.08 - Net income (loss) 375,875 2,686,083 (86) (2,330,714) 205,045 (1,237) � Per share - basic and diluted 0.01 0.13 (92) (0.07) 0.02 (450) Working capital (net debt) (3)2,749,671 (8,050,303) (134) 2,749,671 (8,050,303) (134) Total assets � 132,853,561 � 133,523,566 (1) � 132,853,561 � 133,523,566 (1) Capital expenditures(4)372,788 20,624,194 - 6,628,910 9,941,786 - Weighted average shares outstanding (5)� � � � � � Basic 31,317,726 20,762,195 51 31,317,726 10,535,902 197 Diluted 31,317,726 20,762,195 51 31,317,726 10,818,508 189 Operating� � � � � � Average daily production � � � � � � Crude oil and NGLs (bbls/d)601 607 (1) 601 407 48 Natural gas (mcf/d)3,666 4,993 (27) 3,889 3,173 23 Total (boe/d)1,212 1,439 (16) 1,249 936 33 Average sales prices � � � � � � Crude oil and NGLs ($/bbl)93.79 65.08 44 86.84 66.79 30 Natural gas ($/mcf)4.18 4.10 2 4.16 4.37 (5) Total ($/boe)59.16 41.66 42 54.71 43.86 25 Wells drilled - gross (net)� � � � � � � Exploration 1(0.3) 2(0.6) - 1(0.3) 3(1.2) - Development - - - 5(2.6) 4(1.2) - Total 1(0.3) 2(0.6) - 6(2.9) 7(2.4) - Drilling success rate (%)100 100 - 83 88 - Operating netback ($/boe)� � � � � � Oil and natural gas sales 59.16 41.66 42 54.71 43.86 25 Realized gain (loss) on financial instruments (0.67) - �-� (0.26) - �-� Royalties (8.82) (4.15) 113 (9.08) (4.11) 121 Operating costs (19.09) (15.38) 24 (18.71) (19.04) (2) Transportation (1.81) (0.85) 113 (1.72) (1.00) 72 Operating netback 28.77 21.28 35 24.94 19.71 27 � � � � � � � �Notes: (1) � 2010 results have been restated to conform with International Financial Reporting Standards. (2)� Funds from (used in) operations is a non-GAAP measure and is calculated as cash flow from operating activities before the change in non-cash working capital, abandonment expenditures and transactions costs. (3) Working capital excludes unrealized gains and losses from financial derivative contracts and flow through share liability. (4) Capital expenditures include property acquisitions and are presented net of proceeds of disposals, but exclude corporate acquisitions. (5)� On April 7, 2010, TriOil Resources Ltd. consolidated its outstanding class A common shares on a 20 to 1 basis as approved by shareholders.� Comparative figures have been presented as if this share consolidation occurred on January 1, 2010. Forward Looking Statements This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project", and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected economics of future projects, expected future operating costs, expected future commodity prices, expected production and reserves growth and the future operations of TriOil. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2011, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells, prevailing commodity prices and the availability of additional capital if and when required by the Corporation. Any references in this news release to initial and/or final raw test or production rates and/or "flush" production rates or 30, 60 and 90 day production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy the conditions to closing the transaction, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and TriOil undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. Meaning of BOE The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. Russell J. Tripp, President & CEO, TriOil Resources Ltd.; Cheryne Johnson, VP Finance, TriOil Resources Ltd.; Andrew Wiacek, VP Exploration, TriOil Resources Ltd.; Corporate Phone: (403) 265-4115 .

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